Business Model of OYO Rooms

OYO Rooms is an aggregator that provides a market place for online hotel bookingsimilar to
Uber, which provides a marketplace for online cab booking. Started in the ear !"#$, OYO is
turning into %ndia&s largest chain of hotels. %t has a ver simplebusiness model where it
adopts hotels, get them to follow certain basic standards of services, features, sta', pricing and
securit and then list them on its web portaland sells them under its brand, earning a part of
the pro(t from the deal. )urrentl the compan is following invest and e*pand mode. +ill now it
has received fundingfrom the big (rms like Se uoia and is estimated to be worth - "" million
after itslatest round of funding in /ugust this ear, where it received -#"" million.OYO&s asset
free business model has now challenged the capital heav hotelindustr . +he compan does
not own an of the properties listed on its site. %t onl invests in marketing and ualit
improvements for the hotels under its banner. +hemodel provides a win0win situation for both
the small budget hotels and owners ofspare properties, who do not have enough capacit ,
network and knowledge ofsmart marketing. OYO has helped them increase their bookings b
more than #""1thereb improving their ields.
Uni ue Selling 2roposition
3inding hotels in %ndia is not a big problem, the ma4or issue is the trust factor
andpredictabilit of services. OYO founder, Ritesh /ggarwal, capitali5ed on this basicneed b
providing standardi5ed hotel rooms across the countr . +he complete modelof hotel industr
is based on consumer e*perience, and with the beautifulamalgamation of technolog
and ualit control mechanisms has improvedcustomer e*perience even at economical
rates. +he complete model is designedkeeping in view the consumer e*perience, right from
booking to (nding hotel tostandardi5ed services to high technolog room service option. +o
further enhancethe customer e*perience, compan has tied with /irtel to provide its
customers aworld class in0room internet and +6 viewing e*perience at no additional cost.OYO
rooms has also started two new sub0divisions to increase its hold on themarket7
OYO Premium
8 Moving from the budget room segment, compan has also startedpremium room service in
metro cities to increase its customer base. OYO premiumrooms will cater those business
travelers or families who are looking for premiumservices and are read to shell out few e*tra
bucks for higher comfort.
OYO WE
8 OYO 9: a 9omen e*clusive brand, started b OYO Rooms to cater forwomen travelers with all
women sta' and special amenities for women. Some of thefeatures particular to this categor
include automatic door locks, hair dr er, fulllength mirror in rooms, doctor and beaut
services on call, apart from librar withmaga5ines for women and cab services outside the
propert .
)ustomer Segment
+he soul of an business lies in the customers it serves. ;o business model cansurvive without
taking into consideration the customer segment it wants to cater itsproduct or services. /nd
then create the rest of the model based on needs anddemands of our customer.Since OYO
works as a platform that serves two interdependent customer segments,the visitors and the
hosts7
1. Hosts
%n this section the compan targets an one who has a spare room or propert thatcan be
rented giving the owner e*tra income. +he owner has to spend some initialamount on the
room to make it as per the standard set b OYO. )urrentl it has tie0ups in #<= cities in the
countr and has around <""" hotels.
2. Visitors
+he hotel industr in the countr has been traditionall dependent on tourists bothtravelling
across the countr and the tourists from abroad who come to see thediverse culture, climate and
historical places. /nother growing segment of thecustomers are business travelers. +his segment
prefers comfort and normall havea long sta which ma even e*tend to months in man
cases depending on thepro4ect re uirements.:ven for budget hotels of the categor of OYO,
these two customer segments standvalid as the trend of sta ing in lu*ur hotels has recentl
shifted to budget hotelswhere along with low costs, people feel more connected to the place.
%t also provesto be economical for business travelers who have to sta for prolonged
durationsand are looking for a more authentic sta ing e*perience than the one the get in
ahotel./nother consumer segment that has emerged latel is the students, families
andentrepreneurs who are looking for short duration sta s. Some of the entrepreneurshave been
permanentl sta ing in such rooms that cost around #>, and proves to becheaper than $ B?>
@at, where the also have to pa for brokerage, electricit andbasic amenities. /lso this gives
them an option of shifting from one location toanother on need basis and the do not have to
bother about hunting for new placesto sta . 3or students who come on weekends to metros to
take coaching, this is agood option as the can rent rooms on sharing basis, thereb reducing
there needto rent a place in metros.O o Rooms claims that its target audience is divided between
customers andconsumers. %ts customer ages between !# ear to $< ear while its consumer
isbetween the age of #A ear and A< ear.